Written Commentary
SOYBEANS
The long holiday weekend did not produce a completed peace deal with Iran, but both sides still indicate they are close. Most believe the worst of the war may be over, which has pushed crude oil sharply lower overnight. The soy complex came under early pressure, even though a much drier pattern is set to move into the Midwest over the next 2 weeks with above-normal temperatures for the northern half of the region. The significant uptick in soil moisture recently across the Midwest has given the newly planted crops in the major production states a cushion to withstand temporary periods of dryness. The pattern needs to be watched closely to see how long it stays in place, but for now, traders seem unconcerned.
SOYBEAN MEAL
Last week, soymeal closed lower during the first four days before finally turning up on Friday and reversing higher on the daily chart. A large flash sale on Friday to Unknown was an indication that US demand remains very firm and was the main reason for the rebound. The US meal shipment pace is nearly 10% ahead of USDA projections for the season.
CORN
The market is weak this morning as energy prices pull back and both the US and Iran continue to say a peace deal is near. Significant flash sales on Friday to Mexico and Unknown are evidence of strong demand on breaks, but without energy support, the bears have grabbed the near-term edge.
WHEAT
A lower start across the wheat complex this morning after selling off most of last week. Crude oil is weaker on the potential for an end to the war, and that will be a headwind early this week, along with a seasonal tendency for prices to weaken going into the HRW harvest.
CATTLE
Traders are expecting a lower start to the cattle complex this morning after mostly bearish Cattle on Feed numbers on Friday afternoon. Placements were 3% above the average guess, marketings were slightly lower than the estimate, and on feed slightly higher. The report, combined with cash trade easing on Friday, may prompt some selling to start the week. However, the market did pull back in anticipation heading into the report
HOGS
July hogs Friday finished with minor gains for the first higher close in 7 sessions. Daily trading volume was average, and the bulls would have probably preferred to see a much higher-volume reversal to mark a low, since recent reversals have failed. But a higher close today would at least ease the recent technical pressure.
MILK CLASS III
June Class III milk finished last week with a sizable loss after reaching a new contract low on Friday.
CRUDE OIL
July Crude Oil was lower early Tuesday relative to Friday’s trade but was up off its lows, while Brent was higher relative to Monday’s close but inside Monday’s range. The market was sharply lower over the weekend off optimism about a potential agreement between the US and Iran over reopening of the Strait of Hormuz, but it bounced off a report that the US military struck targets in southern Iran on Monday, including boats attempting to lay mines and missile launch sites. Representatives from both nations said they have made progress on a memorandum of understanding that would halt the war and give negotiators 60 days to reach a final deal.
NATURAL GAS
July Natural Gas was higher early Tuesday after falling to its lowest level since May 7 early in the session. European natural-gas prices were higher after the US attacked targets in Iran and after QatarEnergy extended a force majeure clause on some LNG deliveries. The US market has been insulated from global LNG trade for the most part because US is already exporting about as much LNG as it can.
DOLLAR INDEX
The USD index is 0.13% lower at 99.11, staying rangebound though peace-deal optimism and lower oil prices create a downward bias for the dollar and lift currencies of counties more exposed to oil flows. A detailed announcement of a peace deal and restoration of oil flows through the Strait could unwind flight-to-quality longs and see the dollar drop substantially. Still, underlying fundamentals remain mildly supportive of the dollar with US interest rate differentials.
COCOA
July Cocoa was higher early Monday after finding support on Friday at the 50-day moving average as well as the 0.618 retracement of rally from the March 2 contract low to the May 11 high. Ivory Coast farmers interviewed by Reuters said that rains were more intense last week than previous week (even if they were scarcer), which they said were sufficient to boost the last stage of the mid-crop.
COFFEE
July Coffee managed to bounce off overnight lows and rally back to unchanged early Tuesday. Reports that Brazil’s harvest is behind normal with additional heavy rainfall in some growing areas over the weekend threatening to delay harvest further may have lifter the market off its lows. Safras & Mercado said on Friday that Brazil’s coffee harvest for the 2026/27 crop reached 9% of the planted area as of May 20 versus 13% at this point last year and a five-year average of 14% for the period.
COTTON
July Cotton found support on Friday just above the 50% retracement of the move from the contract low in February to the contract high this month, and it held that level again early Tuesday. The weather forecast looks more bearish this morning than it did at the end of last week, especially with West Texas expected more rain.
SUGAR
July Sugar gapped lower early Tuesday and fell to its lowest level since May 7 in line with a decline in crude oil in the wake of President Trump’s announcements over the weekend that a peace deal with Iran was close. The market has seen support in from time to time by expectations that high energy prices will inspires more ethanol production at the expense of sugar, as well as uncertainty over the upcoming crops because of El Nino.
PRECIOUS METALS
June COMEX stayed rangebound overnight, finding support at the psychological $4,500 level. Risk sentiment is constructive overall, with lower Treasury yields and a softer dollar, while oil prices declined on hopes that disruptions in the Strait may ease.
Silver futures are 0.60% higher at $76.65.
Copper prices fell overnight on the LME as a flare up in US strikes against Iran created uncertainty over US-Iran peace talks. Benchmark three-month copper on the London Metal Exchange fell 0.4% to $13,610.
EQUITIES
Equity index futures are higher overnight, with investors largely looking past the flare up in strikes on Iran amid cautious optimism around ongoing negotiations and continued support from strong recent earnings momentum. Risk sentiment is constructive overall, with lower Treasury yields and a softer dollar, while oil prices declined on hopes that disruptions in the Strait may ease.
INTEREST RATES
Yields are modestly lower across the curve as the latest developments in Iran offer room for the relief rally in the bonds to continue. The oil market remains the main driver in price direction, with moves lower in oil friendly to gains and vice versa. For bonds, downside risk remains Iranian opposition to peace talks.
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